The Canada Pension Plan (CPP) death benefit, or CPP death benefit, is a $2,500 payment given to the estate of a CPP contributor after they pass away.
The CPP death benefit is considered taxable income and is used to cover costs related to a contributor’s death, such as funeral expenses.
The estate’s executor or administrator can apply to receive the CPP death benefit within 60 days after the deceased’s date of death.
Key Takeaways
- The CPP death benefit a one-time payment available for the executor or beneficiary of a deceased Canada Pension Plan contributor.
- This benefit is considered taxable income and therefore is subject to taxation.
- If the individual receiving the benefit is not the beneficiary, and if a few other requirements are met, taxation does not apply.
What is the CPP death benefit?
The CPP death benefit is a one-time payment available for qualified Canada Pension Plan contributors.
It's released after their death, to the executor or beneficiary of their estate when they apply for it.
Is the CPP death benefit taxable?
Yes, the CPP death benefit is taxable in Canada. As money coming into the deceased’s estate or to a beneficiary, it's considered taxable income.
The CPP death benefit is different from a supplementary death benefit (SDB) paid out from an employer and is not eligible for a tax exemption.
When is the CPP benefit not taxable?
The benefit may not be taxed if the individual receiving it isn’t a beneficiary, and all of the following are true:
- They paid the funeral expenses
- The CPP death benefit amount is lower than the funeral costs
- The deceased contributor has no known heirs, assets, or property
In other words, if the benefit is paid directly to a funeral home to cover the costs of the deceased’s funeral expenses, it's not taxable.
If the estate accepts the CPP death benefit payment and then uses it to pay for funeral expenses, the estate can deduct the amount.
How to report CPP death benefit on your taxes
To report the CPP death benefit on your taxes, you'll first need to find the amount you need to report:
- T4A slip: You'll receive a slip from the CRA, with the taxable amount in box 18
Next, report the CPP death benefit for tax purposes:
- The trust or estate: Report it on a T3 Trust Income tax slip, under "Other income" (Line 11)
- The individual recipient: Report it on a T1 income tax form
Note that the actual tax amount will depend on the beneficiary’s income tax bracket for that year.
Do not include the CPP death benefit on the deceased CPP contributor’s final tax return.
Who claims the CPP death benefit?
This benefit is usually claimed by the person executing the deceased’s estate. They may be named in the will, or they may be an administrator named by the court.
Otherwise, it can be claimed by:
- The person or organization paying the funeral expenses
- The deceased’s spouse or common-law partner
- The deceased’s next of kin
To claim the CPP death benefit, apply within 60 days of the CPP contributor’s death.
Who is responsible for paying the CPP death benefit tax?
The person or estate that directly receives the CPP death benefit is responsible for paying taxes on the CPP death benefit.
- If paid to estate: The estate includes the CPP benefit payment in the deceased’s tax return.
- If paid to individual: The individual reports the CPP benefit payment as income on their personal tax return.
Note that the money may not be taxable if it was used to cover funeral expenses directly.
How much is the CPP death benefit?
In 2024, the Canada Pension Plan (CPP) death benefit is a one-time lump-sum of $2,500.
Parliament is considering an amendment to provide a death benefit of $5,000 when no other CPP benefits have been paid in respect of the deceased contributor’s contributions (excepting the orphan’s benefit).
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Is the CPP death benefit taxable?
Yes, the CPP death benefit is taxed if the benefit is paid to a CPP contributor’s beneficiary or estate. If someone other than the beneficiary receives the benefit directly and a few requirements are met, an exception can be made.
Who is the CPP death benefit taxable to?
Whoever receives the CPP death benefit pays taxes on the income. This benefit should be reported on a beneficiary’s T1 personal tax return, or on the estate’s T3 income tax return if it doesn’t go to a beneficiary.
Is CPP death benefit subject to probate?
This benefit is not usually subject to probate if it’s paid to individuals or funeral homes. However, it depends on whether the benefit becomes part of an estate (which would be subject to probate). Check the laws where you live.
Can you claim funeral expenses on your taxes in Canada?
In most cases, you cannot claim funeral expenses. With the CPP death benefit, exceptions may be made if an estate files taxes for the deceased (when their funeral expenses can be deducted) and a few other requirements are met.
How long does it take for the CPP death benefit to arrive?
It can take between 6 and 12 weeks for the CPP death benefit to arrive. Applying within 60 days of the CPP contributor’s death can expedite the process. Check the status of your application in your My Service Canada account.
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